Proposed auto insurance law would reduce premiums But trial lawyers oppose eliminating option to sue for pain and suffering

January 20, 1998|By KNIGHT RIDDER NEWS SERVICE

WASHINGTON -- In a year when big-ticket topics such as tobacco lawsuits and highway spending are expected to dominate Congress, a low-profile proposal to revamp auto insurance could become the issue that really pulls at people's purse strings.

The auto legislation would cut insurance premiums an average of 32 percent, according to a study last year by Congress' Joint Economic Committee. That would mean savings of $243 a year for the average driver -- or nearly $45 billion a year nationwide. In Maryland, the savings would be $279.

The proposal would let consumers give up the option of suing for pain and suffering in auto accidents. Instead, drivers could choose coverage for basic economic losses, such as medical bills and lost wages.

Supporters argue that though most drivers never will sue for pain and suffering, the explosion in such lawsuits, and the fraud associated with them, have led to high premiums generally.

They say their "auto choice" plan would speed compensation to drivers and help unclog the court system, in addition to reducing premiums.

"This is like a tax cut," said Republican Sen. Mitch McConnell of Kentucky, one of the plan's primary backers.

Given the amount of money involved, the auto-choice proposal will draw tough opposition.

Already, consumer advocate Ralph Nader and the lawyers who represent people injured in car accidents have lined up against the measure. Auto choice promises more than it would deliver, they say, and could block citizens from the courthouse.

"At the end of the day, what it's designed to do is to get people to buy into a system that gives them fewer legal remedies when they get in a wreck," said Rich Hailey, an Indianapolis attorney who is president of the Washington- based Association of Trial Lawyers of America.

Even McConnell concedes that passing the bill is a "pretty big reach." But because most adults drive -- and drivers are required to buy insurance -- efforts to trim auto costs are popular with politicians and voters, McConnell said.

The auto-choice proposal would offer drivers these options when buying car insurance:

Drivers could choose traditional "tort" coverage, which would allow them to sue for pain and suffering, as well as economic losses. In general, though, a driver could sue only if the other driver also was covered by tort insurance.

The other option for drivers would be essentially "no lawsuit" coverage. Drivers could collect economic losses -- medical bills and lost wages -- from their own insurers. One driver could sue the other driver if those economic costs exceeded his or her policy. But drivers still couldn't sue for pain and suffering, unless the other driver was drunk.

If the measure becomes law, state lawmakers still could amend the auto-choice legislation or vote not to implement it at all. Also, a state insurance commissioner could strike auto choice if the savings for bodily injury insurance wouldn't reach at least 30 percent.

The trial lawyers association, along with Nader's consumer-advocacy organization Public Citizen, argue that choice won't mean big savings because states with no-fault systems since the 1970s haven't seen dramatic rate cuts.